Influence of guanxi, trust and farmer-specific factors on participation in emerging vegetable markets in China

Abstract

The fast development of market outlets (e.g., supermarkets, processing industries, international markets) in China provides rich opportunities for small-scale farmers to upgrade quality and increase income.However, the high level oftransaction costs incurred in small-volume-based vegetable transactions hinders farmers from participating in these emerging markets. This article explores how personal relationships (called guanxi in China) and trust between farmers and their buyers influence transaction costs in vegetable transactions, and thereby also farmers' participation in emerging markets. We interviewed 167 vegetable farmers in Jiangsu Province, which provided data for empirical testing using two-stage probit analysis with endogenous variables. The findings suggest that guanxi and trust effectively reduce transaction costs in vegetable marketing in China, which may help and encourage farmers to better participate in emerging markets. The results also reveal that farmers' age, education, marketing experience, distance to the market, production scale and land quality influence transaction costs. The article ends with policy implications with respect to efficiently reducing transaction costs in vegetable supply chains in order to create a better environment for small-scale farmers in emerging markets in China.

Agri-fresh food supply chain quality (AFSCQ): a literature review

“…Here it is felt that for perishable products and especially for short shelf-life products, an integrated performance measurement system will elevate the AFSCQ. Gibbs (1995, 1999), Wilson (1996), Soucie (1997), Salin (1998), Fearne and Hughes (1999), Sporleder and Goldsmith (2001), Hingley (2001Hingley ( , 2005, Van der ), Le Heron (2003, Digal (2005), Cadilhon et al (2006), Vasileiou andMorris (2006), Jedermann et al (2006), Sohal and Perry (2006), Hingley et al (2006Hingley et al ( , 2010, Beckeman and Skjöldebrand (2007), Shu et al (2007), Holt et al (2007), Duan et al (2007), Lu et al (2008), Minten et al (2009), Alfaro and Rábade (2009), Blackburn and Scudder (2009), Bevilacqua et al (2009)…”

Perishable food supply chain quality (PFSCQ)

“…. The suggested supply chain quality Relationship quality means collaboration quality between supply chain partners, including trust, consistent quality, reputation, etc Lu et al (2008). discussed about personal relationships and trust between farmers and their buyers.…”

What factors influence access to and the level of participation in high value mango markets by smallholder farmers in Ghana?

“…According to Maina et al (2015), high levels of trust reduce transaction costs because farmers spend less time ensuring that contracts are enforced mostly regarding timely payments. In addition to the transaction-cost-reducing function of trust, it facilitates the circulation of reliable information about technology and market opportunities and also enhances the exclusion of unreliable agents for farmers (Lu et al, 2008). Considering that the export market is the most organized market, the agents are trustworthy and there is a relatively high level of transparency in their dealings with the farmers.…”